Soaring energy prices took eurozone inflation in November to its highest rate on record since the euro was introduced in 1999, official data showed on November 30, challenging the European Central Bank’s (ECB) resistance to tightening monetary policy earlier than planned.
Consumer prices rose by 4.9 per cent in November, up from 4.1 per cent the previous month, the highest reading since the official statistics agency Eurostat began compiling the data more than 20 years ago. The figure is more than double the ECB’s target of two per cent.
Inflation has soared worldwide as demand and economies have bounced back from coronavirus lockdowns, and the emergence of the Omicron variant has created new uncertainties.
Higher cost-of-living is being experienced across the eurozone, putting pressure on the ECB to scale back stimulus and consider raising interest rates earlier than planned.
But the Frankfurt-based institution has so far insisted that the acceleration in inflation in the 19-nation zone is transitory, and is wary of acting too soon and potentially stifling the pandemic recovery. Its next policy meeting is on December 16.
High demand after the easing of coronavirus restrictions has pushed up energy prices and led to shortages of key materials and labour around the world.
The current supply chain woes and shortages will ease over time, ECB chief Christine Lagarde told Germany’s Sueddeutsche newspaper, with the ECB estimating that inflation will start to fall back next year.
Inflation has gone up every month in the euro area since June.